Another retailer has failed in the “greatest economy ever,” as more than 12,000 stores closed in 2019, and mall vacancy rates across the country hit 8-year highs.
Home decor and furniture retailer Pier 1 Imports closed 450 out of 942 stores last month, a last-ditch effort to save itself from collapse. Fast forward one month, the retailer has filed for Chapter 11 bankruptcy and has prepared for a sale.
The retailer has struggled to adapt to an evolving retail market with new dominance seen by e-commerce giants Amazon and Wayfair. A weakening consumer base with insurmountable debts has weighed on home goods purchases.
Pier 1 CEO and CFO Robert Riesbeck said in a statement released on Monday that the decision to file for Chapter 11 will give the company “time and financial flexibility” to prepare the company for a sale.
“We are moving ahead in this process with the support of our lenders and are pleased with the initial interest as we engage in discussions with potential buyers,” Riesbeck said.
Pier 1 intends to have a “court-supervised sale process and complete the sale through a Chapter 11 plan” by March 23.
Pier 1 listed assets and liabilities of about $500 million and has secured $256 million of debtor-in-possession financing from Bank of America Corp., Wells Fargo & Co., and Pathlight Capital LP.
The retail apocalypse is expected to gain momentum in 2020 as mall vacancy rates are already at 8-year highs. Last year, retailers shuttered a record number of stores, nearly 12,000 by 4Q.
Mapping out the retail chain chapter 11 filings in terms of aggregate liabilities for 2019, one can see how bankruptcies soared in 1Q and then erupted again in the back half of the year (data via Reorg First Day).
Retail bankrupticies over the last half decade have been nothing short of astonishing.
Talking points from the Trump administration have said since unemployment is low, the consumer is healthy, and this means the economy is roaring. But we all know the consumer is taking on record amounts of debt at a time when the economy is quickly decelerating. The jobs market is slowing, and consumer trends suggest a period of weakness is ahead.
To sum up, the retail apocalypse has yet to peak, store closings and bankruptcies are expected to continue through the year.